What to do if the Budget cracks down on super tax breaks
It’s looking very possible that the Federal Government may take the axe to superannuation tax breaks in the upcoming Budget, so it’s time to look at your options.
More Australians than ever before intend to work beyond 70, as Generation X-ers and Baby Boomers fear they lack the financial security needed to retire any sooner.
The findings, which come as the Turnbull government weighs superannuation reform in the May budget, have sparked fresh concerns that a comfortable retirement is now “out of reach” for hundreds of thousands of low-income earners.
An analysis of Australian Bureau of Statistics data shows the number of over-45s who say they will not retire before turning 70 has dramatically increased, from 8 per cent to 23 per cent in a decade.
Childcare worker Kerrie Devir has worked for almost 35 years continuously, but has less than $100,000 in superannuation. Photo: Paul Jeffers
Seniors groups say the figures indicate people are ageing in a much healthier way and want to keep working, but also reveal deep “financial uncertainty” among older workers following a series of superannuation and pension changes
Retirement before 70 is “out of the question” for Melbourne woman Kerrie Devir, who has worked in childcare for 33 years.
“When I look into the possibility of retirement, it’s a financial train wreck of massive proportions,” she said.
‘Incredibly cruel and short-sighted’: United Voice – the union representing some of the country’s lowest-paid workforces – said the findings were an indictment on former prime minister Tony Abbott’s decision to freeze an increase to employer super contributions. Photo: Alex Ellinghausen
“Because my wages have been so low and continue to be so low, superannuation just doesn’t build … Nine per cent of a very little amount is still a very little amount when you retire.”
Ms Devir said she had accumulated less than $100,000 in superannuation, despite having worked continuously since she was 17.
And with the rising national life expectancy, Ms Devir, a single woman, said she was worried she could be forced into poverty after she is no longer physically able to work.
With Australians living longer, there are concerns about how much money is needed to fund a long retirement. Photo: Glenn Hunt
“On my mother’s side, I have longevity, on my dad’s side I don’t,” she said.
“I’m not sure that I want my mother’s longevity … that’s not going to play out very well for me.”
According to the ABS, the most common factor influencing people’s decisions on when to retire was financial security (40 per cent of men, 35 per cent of women).
This was followed by personal health and physical abilities (23 per cent of men and women) and reaching eligibility age for a pension (13 per cent of men and women).
United Voice – the union representing some of the country’s lowest-paid workforces – said the findings were an indictment on former prime minister Tony Abbott’s decision to freeze an increase to employer super contributions, which had been scheduled to reach 12 per cent by 2019.
“This was incredibly cruel and short-sighted and will have a devastating impact on workers,” union state secretary Jess Walsh said.
“It is no surprise that more and more people are delaying their retirement.”
Ms Walsh said the pension was clearly “not keeping up” and Australians were finding it harder to accumulate enough superannuation to top up the pension to a reasonable level.
She said the value of the minimum wage had gone backwards nearly 10 per cent in two decades, making it even harder to accumulate enough superannuation.
“Our members work hard, they pay their taxes, and yet they can’t afford to retire with dignity.”
National Seniors chief executive Michael O’Neill said the new statistics revealed the “longevity penny has dropped” for people in their 50s and 60s, who were worried they won’t have enough money to fund a long retirement.
“People are saying, ‘I thought I was going to live until about 75, but now it looks like I could be living a lot longer than that … can I afford it?” Mr O’Neill said.
“Longevity has started to become a real issue.”
Mr O’Neill called on the federal government to provide “much greater clarity” about retirement income, including superannuation and the pension.
“People need certainty about what benefits will flow over time … and all the speculation around superannuation causes people uncertainty because they don’t know where it is going to land,” he said.